Correlation Between Salient Tactical and Fidelity Advisor

Can any of the company-specific risk be diversified away by investing in both Salient Tactical and Fidelity Advisor at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Salient Tactical and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Salient Tactical Growth and Fidelity Advisor Industrials, you can compare the effects of market volatilities on Salient Tactical and Fidelity Advisor and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Salient Tactical with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salient Tactical and Fidelity Advisor.

Diversification Opportunities for Salient Tactical and Fidelity Advisor

0.93

Correlation Coefficient

Salient Tactical  Fidelity Advisor

Almost no diversification

The 3 months correlation between Salient and Fidelity is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Salient Tactical Growth and Fidelity Advisor Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Ind and Salient Tactical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Salient Tactical Growth are associated (or correlated) with Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Ind has no effect on the direction of Salient Tactical i.e., Salient Tactical and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Salient Tactical and Fidelity Advisor

Assuming the 90 days horizon Salient Tactical is expected to generate 2.85 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Salient Tactical Growth is 2.78 times less risky than Fidelity Advisor. It trades about 0.16 of its potential returns per unit of risk. Fidelity Advisor Industrials is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,631  in Fidelity Advisor Industrials on September 12, 2024 and sell it today you would earn a total of  421.00  from holding Fidelity Advisor Industrials or generate 11.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Salient Tactical Growth  vs.  Fidelity Advisor Industrials

Salient Tactical Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Salient Tactical Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Salient Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Advisor Ind

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Industrials are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Salient Tactical and Fidelity Advisor

The main advantage of trading using opposite Salient Tactical and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salient Tactical position performs unexpectedly, Fidelity Advisor can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fidelity Advisor will offset losses from the drop in Fidelity Advisor's long position.

The idea behind Salient Tactical Growth and Fidelity Advisor Industrials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.